- Tritax Big Box Reit
- 21 January 2025 08:45:18
Source: Sharecast
The FTSE 250 real estate investment trust said it had also secured a 50% stake in a joint venture with an unnamed European renewable energy provider, enabling accelerated power delivery through pre-existing grid connections.
Subject to planning approval, the first phase of the development would comprise a 107 MW data centre, with construction expected to start in the first half of 2026 and completion in the second half of 2027.
The firm said the project was anticipated to deliver a yield-on-cost of about 9.3%, significantly exceeding typical returns within the company’s logistics development pipeline.
It said it expected to fund the estimated £365m capital expenditure for the first phase through existing financial resources and its capital recycling programme.
The powered shell model, which Tritax Big Box had employed, was expected to generate substantial development profits while mitigating operational risk.
Tritax said the Manor Farm site was strategically located near key data cable routes and is expected to attract hyperscale and co-location operators.
The project included grid connections to two independent transmission substations, offering high resilience alongside co-located utility-scale battery storage.
A planning application for the first phase had been submitted, with a decision expected in the second half of 2025.
In addition to the Heathrow site, Tritax Management had developed a pipeline of further data centre opportunities across the UK, with potential capacity of around 1 GW, expected to be delivered from 2028 onwards.
That expansion strategy would capitalise on the acute scarcity of suitable grid connections and increasing demand for data centre capacity, driven by the growth of cloud computing and artificial intelligence.
Tritax Big Box acquired the Manor Farm site from Airport Industrial Property Unit Trust for an initial £70m, with additional consideration linked to future development profits.
The joint venture stake was purchased from Tritax Management, which would continue to provide development and technical services under a management agreement.
“This is a decisive and exciting first step for the company in the very attractive data centre market which the manager has unlocked with its power and real estate capabilities,” said chairman Aubrey Adams.
“This gives the company a considerable competitive advantage in capturing the growing demand for data centre infrastructure.
“The combination of Manor Farm's prime London location and accelerated access to critical grid connection agreements creates the opportunity to develop quickly one of the UK's largest data centres and deliver exceptional returns for our shareholders.”
Adams said that over the last four years, the manager had independently developed and invested in its power capabilities, securing a joint venture arrangement with “one of Europe's largest” major renewable and low-carbon energy generators which Tritax was now acquiring at Manor Farm.
“This provides accelerated access to power in this prime data centre location, where a lack of power has significantly restricted the development of these nationally critical infrastructure projects.
“Having taken extensive and independent professional advice, the board of Tritax Big Box has successfully negotiated preferential access and terms for this opportunity, which generates exceptional returns and complements our logistics development pipeline.
“The board has also negotiated a right of first refusal with the Manager for all future data centre opportunities with up to 1 GW of power capacity.”
At 0825 GMT, shares in Tritax Big Box were up 0.88% at 137.8p.
Reporting by Josh White for Sharecast.com.
